Fluidra Sa

Good morning, and welcome to our full year 2024 results call. I'm Clara Valera, Strategy, Investor Relations, and FP&A Senior Director. Joining me today on this call is our Executive Chairman, Eloy Planas, our CEO, Jaime Ramirez, and Xavier Tintoret, our CFO. They will walk you through a few slides on our results and then they will be available to take your questions. You can follow this presentation in its original English version or in Spanish. Please select your preferred option in the drop-down menu at the bottom right-hand side of your screen. If you would like to ask a question, please find the information and instructions in the Ask a Question tab on the webcast. Please register to receive dial-in details. After the registration process, you will need to press star five on your telephone keypad to ask your question. The presentation is accessible via our website, fluidra.com, and has also been uploaded to the Stock Exchange Commission this morning. A replay of today's presentation will be made available on our website, data today. With that, I hand it over to our Executive Chairman, Eloy Planas.

Thank you, Clara. Good morning and thank you for joining our full year 2024 results call today and for your interest in Fluidra. Jaime and Xavier will provide more detail shortly, but let me start with a few key takeaways. We deliver a strong 2024 performance at the top of our guidance for the year with sales and adjusted EBITDA growing 3% and 7% respectively. Notably, for the first time since 2021, we have returned to year-on-year volume growth. We finished the year strongly, with sales in Q4 up 9% and growth across all regions. This is an excellent performance of performing the market in a mixed environment with a resilient aftermarket but lower demand for new build. We continue to grow margins, driven by the timely execution of our simplification program, which is well on track to deliver the savings expected for the remainder of the plan. We are pleased with the double-digit growth at the net profit level. Guy's generation was strong, consolidating our progress in working capital management and successfully reducing leverage. We are introducing guidance for 2025. While macro and geopolitical uncertainty remains elevated, we are confident we will continue to deliver organic growth alongside further margin expansion. Beyond 2025, we expect to further expand our leadership in a structurally attractive industry with long-term growth underpinned by favorable growth drivers and a recurrent aftermarket. At our Capital Markets Day on 8th of April, we will share deeper insights into our industry, strategy, and why Fluidra is well positioned for sustained leadership in the global pool industry, delivering growth and value for all stakeholders. On the next slide, you can see how over the past five years we have delivered outstanding performance, exploiting our established position to further strengthen our global leading platform. This was achieved in an extraordinary and volatile period whose dynamics I think you are all familiar with. We generated this progress, growth, margin and efficiency, cash generation and capital allocation with a clear focus on delivery and execution. We have grown revenues at a compounded average growth rate of 9%, expanded adjusted EBITDA margins by 300 basis points, and improved return on capital by more than 460 basis points. I am proud of the team and what we have accomplished to date. We are a preferred partner for our customers or performing our peers and having grown our share in a larger industry. The global install base of pool has expanded, building the foundation for future aftermarket demand. We remain focused on driving long-term success by delivering fantastic pool experiences responsibly, offering more connected and sustainable products, and creating value for our stakeholders. We look forward to discussing our results with you this morning, and with that, I hand first to Jaime to continue with our presentation. Jaime, the floor is yours.

Thank you, Eloy. It is a pleasure to be here with all of you today. Moving to our full year performance on slide six, I will provide some highlights and then turn it over to Xavier to share more detail on the financial results. Our strong 2024 performance was at the top end of our expectations. Sales were up 3% year-on-year to 2,102,000,000 euros. Performance in the fourth quarter was strong, with growth across all regions driven by the 8% higher volumes and positive pricing. Adjusted EBITDA was up 8% year-on-year on constant FX and perimeter to 477 million euros, which represents a 23% margin. This reflects the strength of our business model and the action we have implemented with consistent improvement in gross margin, driven by our initiatives to increase efficiency and productivity, together with mix and partially offset by higher OPEX. Xavier will provide more code later. Going down the P&L, adjusted EPS was up 10% year on year. We have managed working capital very well. Operating net working capital to sales in the last 12 months was around 18%, improving 60 basis points versus last year. Cash generation in the period was strong. The ratio of net debt to adjusted EBITDA at the end of December was around 2.4 times down from last year. On slide 7, you can see on the right-hand side chart the return to organic growth. with volumes up for the first time since 2021, together with a suspected positive pricing contribution. We saw an improving sales development throughout the year with a strong final quarter. North America's sales were up 7% year-on-year, a consistent sequential improvement with good sell-through across our customer base. This performance is a testament to our easy-to-do business with customer-centric approach, our exposure to the Sun Belt, and our meet-to-high-end market positioning. In Europe, where we believe we're also outperforming the market, the recovery we started to see in Q3 continued, with 5% organic growth in Q4. Trading improved as we progressed through the year in a mixed-demand environment with softer markets in France and Central Europe. Overall, new construction demand was as expected, weaker year on year. But this was more than offset by resilient aftermarket demand, shared gains, and not having the correction of inventory in the channel we face in 2023, in particular in North America. Beyond financial results, page eight, as Eloy pointed out, we continue to strengthen our global leading platform, which is recognized by our customers. Let me share some of the highlights of the year. First and foremost, our customer centricity. We have a high quality, innovative product offering with sales from new products launched representing around 20% of total, of which 80% represent products more sustainable than the prior solution. I'm particularly proud we were awarded vendor of the year by the top U.S. distributors for the fourth year in a row. This reflects our sharp customer focus, our attention to service and relationships, and our continued development of cutting-edge pool solutions to strengthen our product offering. Secondly, our margin expansion and investment for growth. We may progress to be a more efficient and effective organization, and Xavier will speak in a bit more detail about the simplification program in a moment. We're investing in our business. both organic and inorganically. In 2024, we announced three Baldwin acquisitions that will help reinforce our leadership in the pool industry. We'll continue to evaluate opportunities as they arise. Last but not least, sustainability is foundational for future growth. You can see on the slide some of our 2024 achievements with our efforts being recognized by well-known rating agencies. With that, I will turn it over to Xavier to explain the financial results in more detail.

Thank you, Jaime. Let's turn to page 9 to start with the P&L. Sales of 2,102,000,000 euros represent a 2.5% increase year-on-year. FX represented a negative impact of 50 basis points and acquisition added 40 basis points of growth. Gross margin reached 56.6%, 340 basis points higher than in 2023, being the seventh consecutive quarter with gross margin higher than the prior year period. We have seen a positive contribution from the simplification program, favorable geographic mix, and pricing read-through despite declines in chemicals. together with deflation on raw materials and limited impact from inflation in freight. Operating expenses reached 712 million, up 10%, with enhanced investments in digitalization, increases in labor costs due to higher production volumes and inflation, and some increase in provisions that cannot be compensated by the contribution from our simplification program. EBITDA of 477 million was up 7%, driven by higher gross margin, more than offsetting OPEC's inflation and some increased investments. EBITDA margin was 22.7, 100 basis points higher than 2023. EBITDA of 380 million is up 7%, with a margin of 18.1%, which is 80 basis points above last year's. Below the EBITDA line, PPA amortization is down 6% to 63 million. Restructuring stock-based compensation and other expenses of $57 million were up 11%, with higher one-off costs from simplification program and lower stock-based compensation. As we look into 2025, the simplification program comes to an end, and we expect this line to be significantly reduced to around $25 million. Net financial result amounted to 67 million, 15% lower than last year, driven by lower debt and the successful hedging program put in place in 2022. Tax rate was 26%, similar to the one of 2023. Net profit reached 138 million, compared to 114 million in 2023, an increase of 21%. As you know, we track adjusted net profit, a good indicator for Fluidra, as we have a significant non-cash amortization charge entirely purchase accounting related that impacts our net profit and EPS calculation. Adjusted net profit amounted to $233 million, 10% higher than last year. On the next page, I will share our progress on the simplification program, which is delivering long-term value and structurally strengthening our business. We have made significant progress in 2024, having achieved to date 68 million euros in cumulative savings. We are on track to finish 2025 delivering the targeted 100 million savings. THIS YEAR'S INCREMENTAL SAVINGS ARE DRIVEN BY GLOBAL STRATEGIC PROCUREMENT EFFORTS AND PRODUCT DESIGNED TO VALUE INITIATIVES. PAGE 11 SHOWS THE FREE CASH FLOW STATEMENT AS WELL AS THE NET DEBT EVOLUTION. FREE CASH FLOW IN THE PERIOD OF 85 MILLION THAT COMPARES TO 160 MILLION LAST YEAR. LET'S LOOK INTO THE DIFFERENT COMPONENTS. Operating cash flow was $311 million versus $429 million last year, mainly driven by two factors. On one side, the lower contribution from networking capital, as in 2023 we generated significant cash from adjusting our inventory levels. And on the other side, the higher cash taxes paid in the year associated to higher anticipated tax payment in Spain in 2024 and the timing of tax payment in prior years. In terms of absolute net working capital numbers, we have continued with the excellent execution with 60 basis points improvement reaching net working capital to sales of 17.6%, despite having invested in the last quarter building higher inventory levels to prepare ourselves for the season. On the investment front, we have used 74 million, 20 less than in prior year, when we closed the acquisition of Meranos. On the financing front, we are 23 million better than prior year due to the lower dividend outflow. Finally, net debt reached 1 billion and 132 million, down around 41 million compared to the prior year period. Our leverage ratio is 2.4 times versus 2.6 times ratio last year, nicely trending towards our two times target. And now I will give the floor to Jaime and Eloy to conclude today's conference.

Moving to our guidance for next year on slide number 12. We are positive about 2025 and expect sales growth and margin expansion. We anticipate a stable evolution in residential new construction demand as well as in remodel, which can be expected to vary by market with some slightly up or slightly down. This is an improvement compared to the declines in new build we have seen in the last years. On the other hand, We expect residential aftermarket, in particular maintenance and repair, to grow low single digits. We also expect positive development in our commercial pool business. We have implemented moderate price increases for the 2025 pool season. This, along with the positive contribution from the simplification program, mostly in gross margin, should more than offset inflation in labor and other costs. We continue to invest in growth and digitalization to strengthen our business for long-term success. Please note that any effects of tariffs on Mexican inputs are not included in our guidance. Next week, we expect to have more information. We have been working on our action plan, which is ready to be implemented in case tariffs go ahead. This plan includes the strategic supply chain adjustments to diversify our procurement base for the long term together with cost-saving and efficiency measures, as well as commercial plans to offset the impact. Our guidance is based on the current euro-to-euro exchange rate of around 1.04, and includes the contribution of the M&A deals completed to date. All in all, we are expecting sales between 2 billion and 140 million, and 2 billion and 250 million euros. adjusted EBITDA between 500 and 540 million euros, and adjusted EPS between 1.33 euros and 1.48 euros. And now back to Eloy to wrap up the prepared remarks before moving to Q&A.

Thanks, Jaime. Our 2024 performance was strong, returning to growth and improving our margins in a mixed trading environment. The simplification program is well on track to deliver planned savings and drive further margin improvement this year. We continue to build a stronger business with our customers at the center of what we do. We are encouraged by the solid underlying demand and we are ready for 2025 with our mitigation plan prepared if tariffs are implemented. Looking into the future, we are focused on accelerating growth, both organically and inorganically, while delivering improving returns on capital over the medium term in an industry with attractive structural growth.

Thank you, Eloy. Jaime and Xavier for your presentation. We now begin the Q&A session. As a reminder, if you would like to ask a question... please find the information and instructions on the Ask a Question tab on the webcast. You have to register to receive dial-in details to ask your question. For those registered, if you would like to ask a question, please press star five on your telephone keypad. The first question comes from Jingji at UBS. Jingji, please go ahead.

Hi, good morning, and thank you very much for taking my question. I have two questions here. The first one is on your performance in Q4. I wonder what was driving the double-digit strong performance in North America, and if you could give a split of how much of that was pricing versus volume. And second question is on your guidance. I appreciate the color by end mark and the detail on pricing. I wonder if you could give some color on what's baked into the top end and bottom end of your I just want to understand the bull case and bear case here, and maybe how much of that is dependent on the broader macro interest rate environment and the tariff development, please.

Thank you.

Okay, if we go with the first question, and I guess you take the second one, Xavier. If we go with the first question, we're very pleased with our strong Q4 performance. And that was mainly driven by volume. Out of the 9%, 8% came from volume, and 1% came from price. Generally, we're seeing low demand in new pools, but aftermarket continues to be very strong for us, and that's where we continue gaining market share, and also we have very positive impact in commercial pools. One important thing to notice is that we follow a lot our sell-through in the market, and our selling and our sell-through are very connected as we finish the year end. When we see our total year growing 7% and when we sell out, from our customers in the mid-single digits. So we feel very good about that. And at the end of the day, a lot of the growth came from gaining market share for us.

I'll take the second one in the components of guidance as shared by Jaime, but let's get a little bit more into detail. We see positive momentum in all regions in the year, as the year has started and as we have built the guidance, in particular around aftermarket, remodel, and commercial pool. We have implemented some price increases, but we still remain cautious because of geopolitical and economical uncertainty. Getting into specifics, we are expecting new build to be directionally flat. And if you go to the lower end or the higher end of the guidance, I mean, in the lower end, clearly, we are still expecting minor decreases. And the higher end is expecting some growth to the tune of, let's say, around 5%. We expect remodel to do a little bit better than new build. And obviously, aftermarket is going to be resilient to the tune of, let's say, 1% to 2%. We continue to execute on all our actions to take market share gains as well. For commercial pool, we expect to continue the positive trend with volumes up between 2% to 5%. And then on pricing, as Jaime said during the call, for the group we expect 1% to 2%, which is going to be a little bit higher in North America, low to mid-single digits, and a little bit lower in Europe and the rest of the world between flat to 1%. And then also, you know, in order to build that guidance, we have counted on the contribution of the simplification program with the delivery of, you know, a little bit north of 30 million to reach that total of 100. Some inflation in labor and general cost to the tune of, let's say, 3%. And it's also important, as Jaime pointed out, that we continue to invest for growth and digital, and the order of magnitude of those investments are going to be to the tune of 10 to 15 million incremental. As highlighted as well, the assumption for guidance is that the euro-dollar rate is around 1.04, which is what we have seen in the last, let's say, 30 days or so. And the M&A contribution expected coming from the deals is of around percent. So all in all, you know, guidance reflects this mid-single-digit growth in sales, high single-digit in EBITDA, and high teens growth in cash EPS on the middle point.

Thank you, Gingy. Yeah, I suppose that's fine with you. The next question comes from Manuel Lorente from Santander.

Yes, hi. Good morning. My first question is a follow-up probably on the U.S. trends. I think Jaime mentioned that you're selling and sell-out was very close by. I don't know if that was mentioned in the U.S. or globally speaking. And again, whether you can give us a little bit more detail whether the plus 13% life-for-life growth in the U.S. in the full quarter is something sustainable or underlined. and what might come as well from some really stocking benefits that you mentioned previously in your guidance.

Okay. Thank you, Manuel. Yeah, when we were referring about the selling and connection with Selao, that was mainly the U.S. market, which is where we have what we consider reliable information or good information from our customers. So, So as I said before, we're very comfortable with what is going on in terms of the inventorying channel, and we track that on an ongoing basis. We are confident that we will continue with the revenue growth. The 14% or 15% in Q4 was a fantastic result. We see that trend increasing. continuing for 2025. As you can see in our expectations for growth in the guidance that we have that we just shared with all of you.

Okay. And then probably my second question is that, I mean, you have done a pretty good job in order to prepare yourself from the upcoming position given the volatility or potential volatility in tariffs. In terms of working capital evolutions on coming quarters, we have seen a very significant effort on the full quarter. That will imply that the standard jump that we see, Q1 versus Q4, will be somehow lower this year than in other years. And again, whether you can give us some color regarding the cash tax. I mean, 100 million euros cash tax for a company that P&L taxes are more on the range to 30 to 50 million euros looks like a very high number. I don't know if we should expect some reversal this year or not.

I'll take those two, Manuel. Thank you. If I start with cash taxes, as I said on the call, this is just a temporary effects of some anticipated taxes that we paid in the fourth quarter and also some timing of favorable timing of taxes in prior years. So it's just more of a comparison thing over the long run. Our cash taxes are going to be fully aligned with what you see on the P&L in terms of taxes, and it's just more of a one-off effect that you see specifically on the quarter, I would say. If I look at the pattern of networking capital, it's true that we have invested in the fourth quarter in inventory to prepare for the season because we're seeing some, you know, good growth trends in the market. And as I said, we're In the call, we wanted to be prepared for that. Is this going to change the pattern? Obviously, the pattern, we start the season a little bit better prepared, but Q1 is going to continue to be a quarter of investment, and Q2 and Q3 are cash-generating quarters. Probably our lowest point continues to be around October. September-October is the lowest point in terms of networking capital-to-sale ratio.

Okay, thank you.

Thank you, Manuel. The next question comes from Christoph at Berenberg. Christoph, please go ahead.

Good morning, and thanks a lot for taking my questions. It's three from my side, please. Firstly, on the action plan that you mentioned in case of the terrorists in the U.S., could you provide a bit more color what exactly those action plans entail? And I assume you have run some scenarios. Do you have any numbers you can share with us, like worst-case negative impact on the EBITDA that you have assessed? Then, technically, on the new bill outlook, you mentioned that overall you expect it to be flattish, but you also said there might be some different trends between the regions. Are there any – can you tell us what regions you're a bit more positive on and which ones you're a bit more cautious? And then also, in 2024, how Europe compared to the U.S. in terms of new bill activity? And then lastly, just generally with regard to your revenue exposure to the different segments of the market towards this new build. So I think generally you usually... Yeah, put the numbers like 60% exposure to aftermarket, 30% new build temps and commercial pools. Now we've seen, yeah, I think about a 50% decline since 2021 in new build numbers or new build activity. So just wondering if there has been a meaningful shift within your overall revenue exposure on the back of those market trends. Thank you.

Okay. So let me go with the first question on the tariffs. Yeah, we have been working diligently on this process. And as I said on the call, on the script, our mitigation plans includes, number one, supply chain adjustments to diversify our procurement base. We see an opportunity in that area, number one. Number two, we're working on – we have plans on cost savings. and efficiency initiatives from the perspective of productivity. And of course, the last one is pricing. We feel confident about that, those plans. The impact that we shared since the beginning on Mexican tariff was around 50 million euros, given the base of manufacturing that we have. And that plan offsets that headwind for us. That's number one. Number two, a new build between the regions and the opportunity we see. We see U.S. flat in new build. But if you think about the U.S. coming from a minus 15% in new build, that's a good scenario if we think about 2025. From the European perspective, we see a slowdown in France And that's probably the most dramatic for us. And in Central Europe, we also see some slowdown. South Europe is holding up really, really well for us. The bottom line of all this for us is that we, and regarding your third question, is outside of the new bill, aftermarket, residential aftermarket is very resilient. And we continue gaining significant market share in that area. And also, another positive story is commercial pool, where we're seeing good organic growth and good opportunities. I would say that new build continues, the 30% number that you mentioned, that's the right number. If that trend continues being flat this year, we're okay with that after, given that our main focus is gaining market share in aftermarket, and as a total, We included that in the guidance we have, and those numbers fit completely.

Thank you, Christoph.

Yeah, thank you.

Thank you. The next question comes from Francisco Ruiz at BNP Paribas. Paco, please go ahead.

Thank you for taking my questions. So I have three questions, if I may. The first one is different OPEX growth. who have accelerated in the last two quarters. My question is here, what is driven that and what should we expect for 2025? The second question is on the cost of the simplification plan. Probably I am missing some other items included in that figure, but you commented, Xavier, a 25 million euros impact for next year, assuming that the compensation of the shareholder would be similar to this year. That means that the shareholder cost of 110 or above 110 million, I don't know if it's the right number or if you are still stuck to the 100 million euros that you commented at the beginning of the plan. And last but not least, if you could give us an idea on net debt for the year. Thank you.

Sure. Thank you, Paco, for your questions. As I mentioned on the call, we've seen a performance in operating expenses a little bit ahead of our expectations. This is where we have seen better performance in gross margin. But operating expenses in 2024 has been impacted by higher production volumes. Remember that 2023 was a year in which we corrected significantly the level of inventory that we had. We have also seen some inflation. We have done investments in digitalization and technology, and we also had, as we commented in prior calls, some impacts associated to provisions on warranties and things like that. Those are the key drivers. On 2024, for 2025, we should normalize the comparable in terms of production to the volumes that we have built into the guidance. We expect some labor inflation to the tune of 3% or so. And then, as I mentioned on an earlier reply, we are also investing between 10 to 15 million incremental to further accelerate growth and increase our digitalization capabilities. So those are the drivers. On your second question on the one-off cost for simplification, your math is directionally correct, and we are spending a little bit over the $100 million that I shared with you at the beginning of the program. The reality is, if you look about the volumes when we built this program, volumes were significantly higher. We are still delivering the $100 million of savings despite that volume decline, which means that we have had to execute some additional initiatives due to the incremental cost that you pointed out. But super happy with the delivery of the simplification, and we see that in margins. And then as to net debt, I mean, you can think about, you know, with a normalized level of, with the EBITDA generation that we have guided, networking capital to sales sort of flattish to where we've ended around this 17 to 18%. Cash generation is going to be good. And therefore, you know, assuming that currencies stay at 104 or so, you will see significant improvement in terms of leverage ratio on an organic basis.

Thank you, Paco.

The next question comes from Tim Lee at Barclays. Tim, please go ahead.

Hi, thanks for taking my questions. I would like to understand a bit more about your action on implementing the measures to offset the tariff impact. So the first one that you mentioned was about to adjust your supply chain. So I'm just wondering, first of all, how do you compare yourself with your competitors in terms of your exposure to Mexico or even China in terms of the percentage of sourcing to your U.S. business? And secondly, if you think about to adjust your supply chain and to diversify your procurement base, are you going to negotiate with your existing suppliers? probable to diversify the sourcing within your existing suppliers, or you need to go to new suppliers to, you know, supply your materials for the U.S. business? There's some questions. Thank you.

Thank you, Tim. Yeah, look, in terms of exposures, obviously, it's up to competition to comment on the exposure. But if you think about our sourcing for North America, roughly 50 percent of what we sell in North America comes from Mexico. Therefore, that exposure that Jaime was mentioning of Europe, of slightly below 50 million of impact of tariffs. The second country of supply is China with around 15 percent, and then some other South Asian countries with another 15 percent, the remaining being U.S. for the U.S., What we have been developing is a combination of negotiation with current suppliers. We have different bases around the world. There's some minor changes to supplier base. And finally, as Jaime pointed out, there's also commercial initiatives that will take place to protect the P&L. All in all, we feel very confident that with this plan, we will offset the impact. of both the potential Mexican tariff, if implemented, and the Chinese tariff that will be implemented in the coming weeks. So I think that's it. I don't know if that's clear enough for you.

Thank you, Tim.

Thank you.

Please go ahead. I don't know if you had a follow-up. Please go ahead.

Sorry, I actually just want to compare your company in terms of sourcing with the other competitors. The competitors also have as high as 50% of their sourcing from Mexico, or probably they could be lower in terms of sourcing.

It's not for us to comment on everyone's exposure, but from our perspective, we are working hard on our plan to offset the tariff effect, and that's what matters. And we believe some competitors may be exposed and others, but it definitely will affect the whole industry. And if you want to follow up, we are happy to chat to you a bit later. No problem. Cool.

Thank you very much.

Thank you. Thank you very much, Tim. The next question comes from Juan Canovas at Alantra. Juan, go ahead, please.

Hi, good day. Yeah, I have three questions. One, you have mentioned market share gains. I wonder whether you could quantify those or give us some ranges. That would be very useful. Second, regarding the simplification program, I mean, we seem to see the benefits at the gross margin level, but then those get diluted at the EBDA level. So I would like to understand how much of those 100 million savings gets down to the EBDA level. I mean, my impression is that some of those gains are being diluted by personal inflation and other things. And within that question also, you mentioned that if you get... If there are tariffs, then you will offset them with some cost savings. Why not going ahead with the cost savings irrespective of the tariffs? And finally, I would like to ask you about the M&A outlook, whether you are seeing more opportunities now than in the past, or how do you think about that? Thank you.

Okay, you want to start with the simplification one?

Sure, no problem. Yeah, you're absolutely right that in 2024, most of the impact has been in gross margin. If you recall, when we launched the program, we said there's around one-third that we hit fixed expenses and around two-thirds that we hit more on the product size, more variable type of expenses. When we launched the program, we immediately executed some resizing of the business due to the market adjustment. We also closed some duplicated facilities and simplified the organization. That mainly took place in 2023. while 2024 and 2025 were years in which the impact is going to be more impacted on cost of goods sold as we're looking at procurement. And we are looking at design to value initiatives that, again, reduce product costing, therefore impact gross margin. And we're super happy, as I said, with the performance. It's true that, as I mentioned in an earlier question, operating expenses have been slightly higher than what we had anticipated in the year as a combination of, as I said, higher production volumes, inflation, and some decisions to invest on building some digital capabilities to enhance further growth in the future and therefore impacting the EBITDA levels. However, we are happy with 100 basis points of margin improvement. You also question about, you know, why are we not taking the cost savings for tariffs? Obviously, this is an ongoing conversation. The situation is very dynamic. We are talking to our suppliers impacted in Mexico and seeing how we all react together to ensure, as Jaime was pointing out, business continuity. But certainly, I mean, if opportunities arise, we are not a company that doesn't take those opportunities.

Yeah, we're going after those definitely, and that's also the level of confidence we have that we have a good plan to offset the impact of tariffs. You're absolutely right. It's a very good point. So going back to your first question on market share, it's a combination of multiple things. Number one, and as I shared before, we've been awarded vendor of the year from multiple customers. That means that we're winning with those customers. That means that we're gaining within those customers. That's number one. Number two, the information we have on sell-out and sell-through that we see, It's very encouraging for us, and we know it's above what our competitors are doing. So this is based also on the positive feedback that we have from our customers, especially in the U.S., which is where we have some data on sellout. Outside the U.S., based on the intelligence we collect and some information, we're seeing that we're growing and we're positive. So that gives us a good confidence that we're gaining market share. You remember we said that in Europe we grew. 5% in Q4, which is above the average of the market. In fact, the majority of the market is negative. So we're confident that gaining market share is what is supporting our growth in all the geographies. On the M&A, Xavier, do you want to?

Yeah, sure. We continue to have, you know, to look out for opportunities who are present in the market. We have a very positive pipeline. And as we say, we always look for strengthening our platform in terms of building opportunities. buying access to customers, distribution capabilities outside of North America, or looking for some products or technologies to reinforce our product portfolio. Still a lot of work, and you will hear from us during 2025 for sure around completed transactions.

Thank you so much.

Thank you, Juan. The next question comes from Anna Radcliffe from Bank of America. Anna, please go ahead.

Hi. Thanks for taking the question. I wanted to dig in a little more on the cost savings. The gross margin was really strong in Q4. It was wondering where you think about the ceiling for your gross margin, and maybe will cost savings in the future outside of what you're discussing around cost savings to offset tariffs. Will future cost savings focus more on the EBITDA line, just thinking about the margin of the business longer term? Thank you.

Sure. Thank you, Anna. Yeah, we were, as I said, very happy with the performance of gross margin in the year, slightly ahead of our expectations through a combination of, as I said, simplification, geographic mix, pricing, some raw material deflation, which I think was higher than what we had anticipated when we built the guidance. And we've only seen some negatives in terms of freight. Specifically about your Q4 question, there's a significant geographic mix effect that drives the majority of that impact. In terms of, if I understood the second part of your question, in terms of potential cost savings beyond 2025, obviously we launched this program, the simplification program, in 2023, which ends by the end of 2025. But this is not the end of the opportunity for Fluidra, as we have shared in the past. And we are working to prepare for the Capital Markets Day, where we will share some of the initiatives that we are planning to execute beyond 25 in order to drive and improve the efficiency. This revolves around operational excellence and globalizing our manufacturing footprint, working on platforms. But again, more to come on April 8th.

Great. Thanks. We'll look out for the updates at the Capital Markets Day. And then maybe just to follow up on the share gains, is there any one area that's standing out either geographically or by product where you're gaining outsized share? Thanks for taking the question.

No, we're seeing share gains across. Of course, the U.S. is probably, given the size of the market and the opportunity, we're going faster. But we're seeing this across the majority of the markets. Even when we see negative markets where we're doing way better, so we continue with that trend.

Thank you, Anna. And we have time for a couple of more questions. The next one comes from Luis from Odo.

Good morning. Thanks for taking the question. Also, moving around the U.S. market, I've seen in the annual report that you increased the long-term rate of consumption. I was wondering if you could refer to what part relates to your developments, your exposure to the Sun Belt, and what part could be related with improving outlook for the industry as a whole on digitalization, sustainability, and so on. The second question also revolving on the U.S., I mean, are you concerned about the U.S. new immigration policies, the potential disruptions across the whole professional sector?

Thanks. Can you repeat the second part of the question, Ruiz? It was difficult to...

Sure. Yeah, I mean, it's a sensible question. This is referring to the immigration policy in the U.S. If it adopts a tougher policy, that might affect some of the potential employees in the professional sector. I was just wondering if that is something that could affect your servicing levels or affect the industry as a whole. Thanks.

Okay. Thank you for your question, Luis. On the long-term growth assumption for the U.S., first of all, we will continue our focus and our share gains in the aftermarket, which is very resilient. That's number one. Second, if we think about new build and the trend of new build in the last year, new build has been declining. And for this year, we're assuming a flat number on new build. We do believe... There is a positive strain that has to come in the U.S. If interest rates continue to go down, construction goes up. And that assumption makes us feel that there is a growth opportunity going forward for the U.S. And then we also comment on the look on commercial pools. On the immigration piece, that's a hard question to answer, really. Because I guess that's more not even a problem for Korea. That's a situation for the country that we don't know what's going to happen. So for us it's very difficult to say. We don't expect something specific. I think there's more to come on the immigration piece and how things evolve. I think probably it's too soon to say, and we should wait a little bit more and see what happens in the market. That definitely can impact construction, but who knows.

Thanks. Thank you. Luis, there are no more questions on the line, so This marks the end of today's presentation. We thank our speakers and obviously thanks to all of you for joining the call today. As always, please feel free to reach out to the investor relations team if you have further questions. And let me remind you, as Aloy mentioned earlier, that we will have a capital markets day on the 8th of April. If you wish to attend and you have missed that registration link on your inbox, please contact the investor relations team. We very much look forward to seeing you there. Thank you.